Today, the New Jersey Supreme Court drove a stake into the many class actions alleging claims under New Jersey’s Truth-in-Consumer Contract, Warranty and Notice Act (“TCCWNA”). That law provides for $100 in damages whenever an “aggrieved consumer” demonstrates that a contract or other document contains provisions that violate any “clearly established legal right.” The Supreme Court’s new decision construed both of those statutory limitations in a manner that should preclude virtually all the pending class action cases.
The decision in Dugan v. TGI Fridays, Inc. and Bozzi v. OSI Restaurant Partners concerned those restaurants’ alleged practice of not printing drink prices on their menus. The plaintiffs alleged that keeping consumers in the dark about those prices until they received their checks allowed the restaurants to inflate drink prices by a dollar or two each. They sued under New Jersey’s Consumer Fraud Act, and because they also contended that the menus were “notices” that violated a “clearly established right” to see prices, they sued under the TCCWNA. An appellate court found that the claims could not proceed on a class basis because the plaintiffs’ issues were too individualized, and the Supreme Court today affirmed that holding.
The Supreme Court began by rejecting the plaintiffs’ consumer fraud class action theories, holding that whether any person was “overcharged” and by how much could only be decided person-by-person. The Court then engaged in an extensive discussion of the TCCWNA, laying waste to the theories under which so many plaintiffs recently have sued online and brick-and-mortar retailers for TCCWNA violations.
A restaurant patron could not have been an “aggrieved consumer” unless, at the very least, “he or she was presented with a menu during his or her visit.” The Court held that this “critical inquiry cannot be resolved by customer receipts or other documents [because]…the testimony of the individual claimant or another witness would be necessary to prove that the plaintiff satisfies the statute’s requirements.” The Court did not address whether one needed to have read or relied on the menu; it was enough to defeat certification in these cases that the mere question of presentment was too individualized. It did not matter that a restaurant allegedly had a policy of presenting menus, and the Court flatly rejected any notion that this inquiry could be deferred until a “post-verdict claims process.”
Then, perhaps even more importantly to the defense bar, the Court put real teeth in the “clearly established legal right” requirement. The Court noted that no prior case ever had construed New Jersey law as requiring drink prices to be printed on restaurant menus (or entrée prices on “specials” boards, for that matter), and no regulation said so, thus making it impossible to claim that any such requirement was “clearly established.” The Court did not say exactly what would be required for a right to be “clearly established,” but it said that this would always be a highly case-specific inquiry that could provide a further bar to class certification.
At oral argument of the cases, many Justices clearly were troubled by the idea that the TCCWNA and its $100 in statutory damages could turn this dispute over drink prices into a billion-dollar matter. Their opinion rejected that contention, saying that “[n]othing in the legislative history of the TCCWNA…suggests that when the Legislature enacted the statute, it intended to impose billion-dollar penalties on restaurants that serve unpriced food and beverages to customers.” That language is a clear warning to lower courts to be cautious before wielding TCCWNA’s $100 damages hammer on a class basis.
Earlier this year, the Supreme Court agreed to accept certified questions from the Third Circuit Court of Appeals on the meaning of the “aggrieved consumer” and “clearly established legal right” standards. Many lower courts in New Jersey have paused TCCWNA litigation while waiting for the Supreme Court’s guidance. Whether today’s opinion will prove to be that guidance, or whether the Supreme Court still plans to separately consider the Third Circuit’s questions, should be clarified shortly.